BARGAIN hunting could snap the stock market out of a three-day decline ahead of monetary policy decisions due later this week, analysts said.
The benchmark Philippine Stock Exchange index (PSEi) closed Friday at 6,616.51, its lowest so far for the month and down 1.7 percent lower week on week.
Philstocks Financial Inc. research manager Japhet Tantiangco said “the local market is still moving sideways with a bearish bias as investors maintain a cautious stance, dealing with lingering headwinds while waiting for positive leads.”
“Chartwise, the market has so far been unable to get past its 10-day exponential moving average,” he added.
“On a positive note, the market is holding its position above the 6,600 level.”
Investors could opt to hunt for bargains, Tantiangco said, but also wait for “positive catalysts before getting into the market strongly.”
All eyes will be on the outcome of the US Federal Reserve’s Dec. 17-18 policy meeting and that of the Bangko Sentral ng Pilipinas on Dec. 19.
“A rate cut from the two, as well as hints of further easing, are expected to give a boost to sentiment, which in turn could help the market achieve a positive close,” Tantiangco said.
He also said that investors would be monitoring the peso’s performance, noting that a “further depreciation of the local currency may weigh on the bourse.”
The peso, which twice returned to a record low of P59 to the dollar last month, weakened by 23 centavos to P58:47:$1 on Friday.
Online brokerage firm 2TradeAsia.com, meanwhile, said that “local equities were barely roused from their lethargy [last week] as funds primarily looked ahead to central banks’ meetings [this week].”
“The Fed’s final FOMC (Federal Open Market Committee) meeting will be held … just after US inflation hit 2.7 percent in November, slightly higher than previous months, and notably, 3.3 percent without the volatile food and energy baskets,” it said.
“The minimal uptick should almost make a rate cut near certainty, bringing the target rate to the 4.25 percent to 4.50 percent range by the end of 2024.”
Unicapital Group research head Wendy Estacio-Cruz said “it is likely that the US Fed will cut a quarter percentage point as [the US’] November inflation rate remains above [the] target of 2 percent.”
Locally, with inflation “relatively more behaved than counterparts abroad,” 2TradeAsia said the BSP had leeway to cut by another 25 basis points (bps) during its last meeting for the year.
The BSP’s benchmark rate currently stands at 6.0 percent following two 25-bps cuts in August and September.
As for next year, 2TradeAsia said “the macro drivers that shaped the peaks and valleys of 2024 — inflation, interest rates, geopolitical friction, weather surprises — are likely to be returnees in the plot of 2025, and therefore be familiar to position with/against.”
It said that the US central bank’s first meeting for 2025 on January 28-29, which will just be after US President-elect Donald Trump assumes office, will likely be a “bigger market mover” given speculation about the pace of easing.
The January meeting is currently pointing to a pause, 2TradeAsia said.
“Expect softer volumes in the coming weeks as funds may withhold on any aggressive capital deployment until more solid direction on rate and fiscal policy is obtained in [the first quarter of] 2025,” it also said.
Analysts said that immediate support this week would be at 6,500-6,600, with resistance at 6,800-7,000.
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